Wa Governor weighs into the fray surrounding escalating power crisis

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Locke weighs into the fray surrounding escalating power crisis Kaiser attacked: Company told to do more for its employees during shutdown

Hunter George; The Associated Press

State officials, big businesses and utility regulators scrambled Thursday in Olympia to find relief from skyrocketing energy prices that Gov. Gary Locke said threaten the Northwest's economy.

There were a string of developments as the energy crisis that caught most consumers by surprise continued:

* Locke said the Bonneville Power Administration and the U.S. Energy Department both endorsed the request by politicians and utilities in the Western United States to cap prices on the wholesale electricity market, which have increased as much as 10,000 percent over prices a year ago. The Federal Energy Regulatory Commission in Washington, D.C., was scheduled to meet today to consider the request. FERC Chairman James Hoecker promised "strong action."

* Locke backtracked on his earlier endorsement of Kaiser Aluminum Corp.'s plan to shut down a Spokane-area smelter for 10 months because it can make more money selling its federally subsidized electricity than it can producing aluminum. He told Kaiser's president that the company must do more for its employees and Washington consumers.

* Boeing, Georgia-Pacific and five other industrial companies asked state regulators to order Puget Sound Energy to provide power at the same rate it charges other industrial customers. The companies currently pay market rates under a five-year contract they requested from Bellevue-based Puget.

* Utilities briefed state regulators on the impact of skyrocketing prices on the wholesale market for natural gas. The utilities said supplies are in good shape, but they need to charge much higher rates to cover increased costs.

Locke noted that Northwesterners believed energy shortages and unprecedented price spikes were impossible just a couple of years ago.

Several companies have curtailed operations and laid off hundreds of workers, while public agencies, schools and universities are faced with the possibility of cutting back programs to meet unexpected energy costs.

The governor also took Kaiser Aluminum to task, just days after praising the company for agreeing to pay benefits and as much as 70 percent of wages for 400 employees who will be idled during the plant shutdown announced Sunday. Locke changed his tune after learning that U.S. Energy Secretary Bill Richardson objected to Kaiser's plan.

Thursday, Locke declared that Kaiser should pay 100 percent of wages to workers during the shutdown. And he said the company, which may earn $300 million by selling electricity, should return some of the power to the BPA since the aluminum industry's rates are subsidized by all other ratepayers.

Returning some power - he did not specify how much - could help lower prices on the wholesale market, Locke said.

Locke said he spoke Thursday with Kaiser President and CEO Raymond Milchovich, who agreed to further talks.

The Washington Utilities and Transportation Commission had a preliminary hearing Thursday in the case of seven companies seeking to get out of a deal they requested five years ago that allowed them to pay market rates for electricity, instead of Puget Sound Energy's set rates.

The companies said the market rates are no longer "fair and reasonable," and that Puget is reaping a huge windfall by charging the high market rates for power that the utility produced or purchased for far less money.

In papers filed with the commission, Puget said the industrial customers have saved millions of dollars by paying market rates for four years. Puget agreed to the demand on the condition those users never would come back and ask to share in the benefits of the utility's regular pool of customers, the company said.

The complaint, filed by Portland attorney Melinda Davison on behalf of the firms, is not expected to be resolved until March, at the earliest.

In an unusual move, Locke waded into the dispute.

He urged the WUTC, whose members he appointed, to find a way to resolve the situation so companies can "get back into production and get workers back on the job."

The governor also said he planned to meet today with officials from Georgia-Pacific and other companies affected by the high energy costs.

And he pledged to send the Legislature a package of proposals that would offer incentives to build power plants and incentives for residential and commercial consumers to conserve energy.

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SIDEBAR: The Tacoma Utility Board will vote on the proposed surcharge at 6:30 p.m. Monday at utility headquarters, 3628 S. 35th St. The Tacoma City Council will make the final decision on the surcharge at 5 p.m. Tuesday at the Tacoma Municipal Building, 747 Market St.

http://www.tribnet.com/news/top_stories/1215a14.html

-- Martin Thompson (mthom1927@aol.com), December 15, 2000


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